China’s Carbon Market to Start Trading
(16 July 2021 – China) China’s national carbon market, which will become the world’s largest emissions trading system, will begin online trading on 16 July 2021.
The system, which will initially cover more than 2,200 companies in China’s power sector, is now ready to commence operations after multiple delays previously. This is estimated to account for over 40% of the country’s and 14% of the world’s energy-related emissions.
The idea of the system is to set quotas for the amount of greenhouse gases that a company can emit during a certain period and allow those who overperform in emissions reduction to sell carbon credits to those companies that exceed their allotments.
Carbon prices are forecast to trade at 40 yuan ($6.19) a ton this year, before rising to 160 yuan a ton in 2030, according to Refinitiv.
There are plans to expand the system in the future to include other industries like petrochemicals, chemicals, building materials, non-ferrous metals, papermaking, steel and aviation.
An official also indicated an openness to consider carbon credits as loan collateral. Using carbon credits to back borrowing is “something that can be explored,” said China Banking and Insurance Regulatory Commission head of the Policy Research Bureau Ye Yanfei.